TY - JOUR
AU - Fahlenbrach,Rüdiger
AU - Prilmeier,Robert
AU - Stulz,René M.
TI - This Time Is the Same: Using Bank Performance in 1998 to Explain Bank Performance During the Recent Financial Crisis
JF - National Bureau of Economic Research Working Paper Series
VL - No. 17038
PY - 2011
Y2 - May 2011
DO - 10.3386/w17038
UR - http://www.nber.org/papers/w17038
L1 - http://www.nber.org/papers/w17038.pdf
N1 - Author contact info:
Rüdiger Fahlenbrach
Ecole Polytechnique Fédérale de Lausanne (EPFL)
Quartier UNIL-Dorigny Bâtiment Extranef, # 211
1015 Lausanne
Switzerland
E-Mail: ruediger.fahlenbrach@epfl.ch
Robert Prilmeier
The Ohio State University
Fisher College of Business
810 Fisher Hall
2100 Neil Avenue
Columbus, OH 43210-1144
E-Mail: prilmeier_1@fisher.osu.edu
René M. Stulz
The Ohio State University
Fisher College of Business
806A Fisher Hall
Columbus, OH 43210-1144
Tel: 614/292-1970
Fax: 614/292-2359
E-Mail: stulz@cob.osu.edu
M2 - featured in NBER digest on 2011-09-01
AB - We investigate whether a bank's performance during the 1998 crisis, which was viewed at the time as the most dramatic crisis since the Great Depression, predicts its performance during the recent financial crisis. One hypothesis is that a bank that has an especially poor experience in a crisis learns and adapts, so that it performs better in the next crisis. Another hypothesis is that a bank's poor experience in a crisis is tied to aspects of its business model that are persistent, so that its past performance during one crisis forecasts poor performance during another crisis. We show that banks that performed worse during the 1998 crisis did so as well during the recent financial crisis. This effect is economically important. In particular, it is economically as important as the leverage of banks before the start of the crisis. The result cannot be attributed to banks having the same chief executive in both crises. Banks that relied more on short-term funding, had more leverage, and grew more are more likely to be banks that performed poorly in both crises.
ER -